After unprecedented stimulus by the Fed and other central banks made many traditional models useless, investors and analysts alike are having to reshape their understanding of cheap and expensive as the global market for bonds balloons to $100 trillion. With the world's biggest economies struggling to grow and inflation nowhere in sight, catchphrases such as "new neutral" and "no normal" are gaining currency to describe a reality where bonds are rallying the most in a decade.


Globally, bonds have returned an average 3.89 percent this year for the biggest year-to-date gain since 2003, index data compiled by Bank of America Merrill Lynch show. The advance decreased yields on 10-year Treasuries by more than a half percentage point to 2.48 percent, the fastest pace over the same span since 1995, while borrowing costs for the riskiest U.S. companies tumbled to a record 5.94 percent last week.


The seemingly unstoppable rally has caused bond-market professionals to reassess whether they're using the right tools.

This Time It's Different(tm)!!!

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